There can be no doubt that our lives are fundamentally different now than they were in March of this year. Virtual Zoom meetings have become the norm. We eat take-out rather than dine in. We shop online rather than visit brick-and-mortar stores. Many businesses here and all over the country are feeling the effects of this pandemic and many may not survive. Understandably, businesses are looking at ways to stem the tide of mounting losses and are looking to their all-risk insurance policies for help. Most of these claims, however, have been or likely will be denied and, as a result, hundreds of businesses all over the country are filing lawsuits against their insurance carriers.

These plaintiffs will have a difficult time making it past the motion to dismiss stage because of a common condition precedent to obtaining benefits under a business interruption policy. Most of these policies require that the insured suffer some form of physical property damage or loss. In Florida, the prevailing view has been that a direct physical loss requires a tangible change in the property. However, some courts in other jurisdictions have allowed recovery in cases where an imperceptible substance contaminates a property making it uninhabitable or unusable. This divergence in the law is likely to be a deciding factor in many of the lawsuits seeking coverage for business losses related to the COVID-19 pandemic.

Until recently, no court had determined whether COVID-19 business losses are covered by business interruption insurance. Two federal district courts have now taken on the issue and have come to opposite conclusions.